Sustainability Boils Down to Scale

Only small scale systems can sustainably impose “skin in the game”– consequences, accountability and oversight.

Several conversations I had at the recent Peak Prosperity conference in Sonoma, CA sparked an insight into why societies and economies thrive or fail: It All Boils Down to Scale. In a conversation with a Peak Prosperity member who goes by MemeMonkey, MemeMonkey pointed out that social / economic organizations that function well at small scales (i.e. localized) fail when scaled up and centralized (i.e. globalized).

I was immediately struck by the impact of scale on markets (Capitalism) and the state (Socialism), an ideological spectrum I’ve written about recently.

Both markets and governance function well at a small scale because those making the decisions must absorb the consequences of their actions/choices.

In large-scale centralized systems, those at the top of the wealth-power pyramid who wield the greatest influence are typically immune from the consequences of their (self-serving) decisions.

Indeed, the entire point of centralized hierarchies is to buffer top decision-makers from the consequences of their actions and choices.

This ties directly into Nassim Taleb’s most recent popularization of the critical role played by participants having “skin in the game,” i.e. exposure to the consequences of their actions and choices.

In a small localized group, it’s basically impossible for anyone, even those at the top of the local welth-power pyramid, to escape the consequences of extractive activities that disupt the local ecosystem.

For example, should overfishing destroy the local fisheries, even the leaders no longer have access to fish.

Should the leadership pursue a conflict with a neighboring tribe, the leaders are just as likely to be killed or maimed as any participant (and very possibly more likely to be killed/injured, as leaders are naturally high-value targets).